Tax and legal clarity to emerge

Independent technology and gaming Lawyer Jay Sayta expects the rate of GST on online gaming and casinos to be clarified. Chances are the rate will likely be increased in 2022 causing industry headwinds.




2021 has been the year of post-Covid recovery as far as the brick and mortar casinos are concerned, with state governments in Goa and Sikkim (the two states where casinos are licensed and permitted) giving approval to restart operations after the deadly second wave of the virus subsided.




The year has also been marked with clampdowns, restrictions and lawsuits on online ‘skill-based’ games with the state of Karnataka in Southern India (the state amounts to upwards of 10 percent of total users and revenues of online gaming companies) being the latest state to pass legislation to ban all kinds of wagering or betting on online games, including skill-based games.




Petitions against this ban have been filed in the Karnataka High Court and petitions are also pending in High Courts of Telangana and Andhra Pradesh, where state governments have imposed similar bans.




An appeal has also been filed by the Tamil Nadu government in the Supreme Court against an order of the Madras High Court that ruled bans on online skill-based games are unconstitutional. The Supreme Court is likely to hear the matter in 2022 and provide an authoritative verdict on online skill-based games played for stakes and its legality in the coming months or years.




Next year, we are also likely to have clarity on the taxation for online gaming, casinos and horse racing as the Goods and Services Tax (GST) Council, the apex constitutional body comprising of centre and states deciding the country’s indirect tax policy, is likely to decide the manner and rate of GST for gambling and betting, including online gaming.




The rate of tax on online gaming and casinos is likely to be increased, which may cause headwinds to the industry.